Chapter VIII
CONTRACT
Article 105. Contract with the successful bidder (contractor)
1. The contract signed between the employer (or authorized agency) and the successful bidder is a civil contract and is made in writing. The legal representative or person authorized by the legal representative (hereinafter referred to as legal representative) of the bidder is responsible for signing the contract; for a joint venture bidder, the legal representative of the joint venture parties is responsible for signing the contract according to Clause 3, Article 67 of the Bidding Law. A contract that has been signed by the parties, is valid, and in accordance with law is the highest legal basis binding the responsibilities and obligations of the parties during the contract performance process and to resolve any arising disputes (if any).
The content of the contract must be prepared according to the form specified in the bidding documents or RFPs, and be consistent with the contract negotiation results (if any), contract finalization results, and contractor selection results based on the requirements of the package and instructions from specialized regulatory agencies.
2. When signing a contract, the contract document must ensure compliance with the following:
a) General conditions of the contract, specific conditions of the contract in the bidding documents, RFPs and corrections and clarifications during the contractor selection process;
b) The bidder's detailed proposals in the bids and proposals approved by the employer and the matters agreed between the two parties during the contract negotiation process (if any), contract finalization;
c) Approval for contractor selection results;
d) Law regulations.
3. Quality management of goods or services; currency and form of contract payment; advance payment; contract payments; payment and contract liquidation principles comply with Articles 108, 109, 110, 111, 112 and 113 of this Decree.
Article 106. Modifications of contract
1. Contract modifications occur when the employer and bidder mutually agree to modify or supplement any terms and conditions outlined in the original signed contract. Contract modifications can only be made during the contract's validity period; modifications to the schedule, volume, and price are carried out in accordance with Clause 2, Article 70 of the Bidding Law. Contract modifications apply to all types of contracts specified in Article 64 of the Bidding Law and must be done in writing.
2. The parties can agree in the contract on the procedures for modifying the contract according to Point a, Clause 1, Article 70 of the Bidding Law in the following cases:
a) When there is a change in policy or law that directly affects the performance of the contract;
b) Force majeure events;
c) Changes in method of transportation, delivery location, and related services for goods procurement packages;
d) Additional volume and quantity of work under the purchase option in addition to the volume and quantity stated in the contract. In this case, the contract modification document must clearly stipulate the volume, value, delivery time or service completion time for additional work and other necessary matters. Delivery time or service completion time for additional work may extend beyond the original contract performance period, but this extension must be approved by a competent person. The employer may choose to purchase additional quantities, but the total number of items purchased cannot exceed the maximum limit specified in the respective contractor selection plan.
If the VAT law changes after the additional purchase option applies, the unit price (including VAT) of the good or service cannot exceed the sum of the pre-tax value in the contract and the new VAT amount at the time of applying the additional purchase option;
dd) Changes in approved design;
e) One or more parties propose initiatives and improvements in contract performance that bring higher benefits to the employer;
g) Changes in the contract schedule according to Clause 3, Article 70 of the Bidding Law;
h) Other cases as prescribed by law and agreement between the parties, including volume, price and other matters.
3. When the price index and other factors fluctuate according to the instructions of the Ministry of Construction, employers and bidders can consider modifying contracts for packages governed by the Construction Law. This ensures compliance with civil law regulations regarding contract modifications due to substantial changes to contract performance circumstances.
4. For packages for procurement of goods and provision of non-consulting services under the procurement estimate that apply fixed unit price contracts, adjustable unit price contracts, if the originally agreed-upon contract completion date arrives and the specified work remains incomplete, the employer can request an extension from the competent person but not exceeding 6 months, except cases specified in Clause 5, Article 93 of this Decree.
5. Situations where the contract price, volume, or other specified terms can be changed without requiring contract modifications or signing a contract modification document as outlined in Clause 5 of Article 70 in the Bidding Law:
a) Adjust contract prices due to inflation and deflation for adjustable unit price contracts, time-based contracts, output-based contracts (if any) as prescribed in Clauses 2 and 3 of Article 107 of this Decree;
b) Increase or decrease volume for fixed unit price contracts, adjustable unit price contracts; for packages of goods procurement and non-consulting services that apply fixed unit price contracts, adjustable unit price contracts, the addition of volume under the additional purchase option will apply contract modifications according to Point d, Clause 2 of this Article;
c) Increase or decrease time for time-based contracts; increase or decrease direct costs of cost-plus-a-fee contracts; increase or decrease the base value to calculate the percentage of costs for percentage-based contracts; increase or decrease the level of payment deduction and increase in payment value for output-based contracts;
d) Other cases as prescribed by law and agreement between the parties.
If the changes to the items specified in this Clause lead to failure to meet one or more of the requirements specified in Clause 5, Article 70 of the Bidding Law, the competent person must be reported to authorize the contract modifications.
Article 107. Adjustment of contract price due to inflation and deflation
1. Contract price adjustment due to inflation and deflation (hereinafter referred to as contract price slippage adjustment) for adjustable unit price contracts is carried out in accordance with Clauses 2 and 3 of this Article. For time-based contracts, output-based contracts, contract price slippage can be applied to contracts with long performance periods or in market situations with large price fluctuations.
2. The application of price slippage adjustment must be specified in the bidding documents or RFPs and be finalized during the contract negotiation process (if any) and contract finalization. The contract must stipulate the principles and time for calculating adjustments; input database to calculate adjustments; time to calculate the price index or original price as a basis for determining the difference due to price slippage for each contract instalment. The content of the contract price must include a provisional price slippage value calculated on the basis of expected price slippage and legal regulations on cost management as a basis for payment. The management and payment of price slippage according to the terms and conditions already in the contract, does not require signing a contract modification document; if price fluctuations cause subsequent instalments and total contract price to exceed the originally package price, the employer must seek approval from the competent person. If approved by the competent person, the parties sign a contract modification document before making payment.
3. Contract price slippage is determined according to the following methods:
a) Direct compensation method;
b) Adjustment method using adjustment formula based on application of price index. The price index used as a basis for calculating price slippage is determined according to the bidding documents, RFPs, detailed contract negotiation (if any) and contract finalization. The index source can be specified according to the price index announced by the General Statistics Office of Vietnam or the construction price index announced by the Ministry of Construction and the Provincial People's Committee. For foreign-sourced cost items subject to price slippage adjustments, the price index published by the independent statistical agency in the foreign country where the cost incurs may be applied. Determining the method and formula for calculating price adjustments must be based on a scientific basis, consistent with the nature of the package, and specific regulations on price slippage risk management in the contract. Employers can apply adjustment formulas that are widely applied in the international market, including regulatory templates of the Fédération Internationale des Ingénieurs Conseils (FIDIC), and guidance from the World Bank ( WB), Asian Development Bank (ADB) and other templates;
c) Other adjustment methods specified in Points a and b of this Clause as per the law.
Article 108. Quality management of goods or services
1. Quality requirements of goods or services must be specifically regulated through criteria, parameters, and product specifications, quality control procedures stated in the technical requirements, specific conditions of the contract and other matters in the bidding documents or RFPs. Based on the bidder's proposal in the bid, clarifications during the evaluation of the bid, proposal and detailed negotiations (if any), contract finalization, quality requirements of goods or services to be supplemented and completed to sign a contract.
2. The contract must stipulate procedures to control quality indicators of goods or services; control the origin of goods.
Article 109. Currency and form of contract payment
1. The currency used to pay for the contract must be specifically specified in the contract and in accordance with the requirements of the bidding documents or RFPs and must not contradict regulations of law.
2. Costs incurred within Vietnam must be paid in Vietnamese Dong, while costs incurred outside Vietnam can be paid in either foreign currency or Vietnamese Dong, as stipulated in the contract.
3. Payments can be made in cash, via bank transfer, or through other methods mutually agreed upon by the parties in accordance with applicable laws and to be clearly specified in the contract.
Article 110. Contract advance
1. A contract advance is a sum of money paid upfront to the bidder to carry out the work under the contract.
2. Depending on the scale and nature of the package, determine the advance level in accordance with law (if any). The contract must clearly specify the following regarding the contract advance: advance amount, advance time, bank guarantee for advance, advance recovery; responsibilities of the parties in the management and use of advance funds; collecting the value of the advance guarantee if the advance funds are used for improper purposes.
3. The bidder shall ensure that the advance capital is used for proper purposes, allocated to the correct recipients, and used effectively. It is strictly forbidden to advance money without using it or using it for improper purposes.
Article 111. Contract payment
1. The contract price and specific payment terms stated in the contract are the basis for payment to the bidder.
2. Payment will not be determined by estimates and applicable State’s regulations and instructions on norms and unit prices, or unit prices listed in the bidder's financial invoice for materials, machinery, equipment, and other inputs.
3. If there are many different types of contracts in a contract, the payment principles corresponding to each type of contract shall apply as prescribed in Article 112 of this Decree.
Article 112. Payment principles for various types of contracts
1. For lump-sum contracts:
Payment is made according to a percentage of the contract price or the price of the project, work item, and work volume corresponding to the payment period agreed upon by the parties in the contract; when making payment, confirmation of detailed completed volume is not required.
2. For fixed unit price contracts:
The payment value is determined on the basis of the fixed unit price in the contract multiplied by the volume and amount of actual work that the bidder has performed and has been accepted corresponding to the completion milestones and terms in the contract.
3. For adjustable unit price contracts:
The payment value is determined on the basis of the unit price or adjusted unit price according to the contract multiplied by the volume and amount of actual work that the bidder has performed and has been accepted corresponding to the completion milestones and terms in the contract. If the contract does not adjust the unit price but adjusts price slippage, the payment value is determined according to the contract price adjusted for price slippage according to the contract.
4. For time-based contracts:
a) Expert remuneration: is calculated by multiplying the expert's salary and salary-related costs (social insurance, health insurance, unemployment insurance, holidays, etc., bidder’s management costs (if applicable) and other costs outlined in the contract or adjusted according to regulations) by the actual working time (month, week, day, or hour) corresponding to the completion milestones and regulations specified in the contract;
b) For work outside the scope of Point a in this Clause, payment will be based on a unit price per unit of time. The total payment will be calculated by multiplying the unit price by the actual working time aligned with the completion milestones and regulations outlined in the contract;
c) Related costs (in addition to expert salary, other work costs applying the unit price per time unit specified in Points a and b of this Clause) include: travel, survey, office rental, communication and other costs are paid according to the method specified in the contract. For each of these costs, the contract needs to clearly stipulate the payment method such as actual payment based on valid invoices and documents presented by the bidder or payment based on the unit price agreed upon in the contract.
5. For percentage-based contracts:
The payment value is determined by multiplying the percentage stated in the contract by the value of the project that has passed the taking-over inspection and consistent with the project insurance period stated in the contract.
6. For output-based contracts:
The payment value is determined on the basis of the actual value of the work that has passed the taking-over inspection corresponding to the payment period agreed upon by the parties in the contract, plus or minus the payment increase/payment deduction value according to regulations in the contract based on output results.
7. For cost-plus-a-fee contracts:
Payment is based on the actual costs the bidder has spent to perform the contract, plus an appropriate profit amount for the bidder based on the provisions of the contract.
8. Processing of payment documents is carried out within 14 days from the date the bidder submits all payment documents to the employer.
Article 113. Contract liquidation
1. The contract is liquidated in the following cases:
a) The parties fulfill their obligations under the signed contract;
b) The contract is terminated (cancelled) as per the law.
2. The parties can agree that the contract will automatically expire upon fulfilling the obligations under the signed contract or signing a contract liquidation record. The contract liquidation record can be prepared separately or as a part of the taking-over certificate or contract termination record in consistence with the responsibilities of the parties specified in the contract. The liquidation of the contract must be carried out within 45 days from the date on which the parties fulfill their obligations under the signed contract or within 45 days from the date the contract is terminated (cancelled) according to regulations of law and no more than 90 days for large-scale and complex contracts.
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